There is room for improvement in ESG reporting by Swiss companies

Managers recognize the strategic value of ESG data, but its effective use to increase business success requires further development. This is shown by a recent survey of Swiss companies conducted by the ZHAW School of Management and Law.

In April and May 2024, the fifth "Swiss Managers Survey" surveyed Swiss companies on the topic of ESG (environmental, social and governance). The representative survey was conducted by the Zurich University of Applied Sciences (ZHAW), the University of Applied Sciences Graubünden (FH Graubünden), the Scuola universitaria professionale della Svizzera italiana (SUPSI) and the Haute École Arc (HE-Arc). With over 400 participating managers from all parts of the country, the survey provides a comprehensive picture of the environmental, social and governance (ESG) climate in Swiss companies. 

Legal implications for ESG reporting

The recent introduction of Corporate Sustainability Reporting Directives (CSRD) in the European Union and the regulation on mandatory climate reporting in Switzerland has raised the priority of ESG for many managers. Nevertheless, a significant proportion of companies do not appear to be prepared for the new ESG reporting. Only just over 40 percent of Swiss companies will publish an ESG report in 2024. "It is particularly alarming that 10 percent of the companies that are now legally obliged to report will not publish a report this year," says Siyana Gurova from the Center for Global Competitiveness at the ZHAW School of Management and Law. 

While the general willingness to publish ESG reports is high, in practice there are challenges such as technical problems and a lack of specialized employees. While almost half of multinational companies have a dedicated ESG officer in their top management, the figure is less than 30 percent for small and medium-sized companies. It is not only the size of the company that has a significant influence on the willingness to comply with ESG standards and their reporting, but also the language regions. The French-speaking regions in particular are lagging behind.

Increasing awareness among companies 

Despite only a slight increase in the number of companies planning to report on ESG issues in 2024 - around three percentage points more than in 2023 - the survey shows that the importance of ESG activities has increased significantly over the last three years, particularly in relation to environmental issues. This increase shows a growing awareness that often triggers substantial organizational change. In contrast, the social dimensions of ESG, such as (gender) income equality, occupational safety and labor practices at suppliers, have gained the least importance.

Different perceptions in the language regions 

The perception of the financial impact of ESG activities on companies varies significantly between the language regions. Managers in Italian-speaking Switzerland perceive low or even negative returns from ESG investments, while their peers in French- and German-speaking regions report more optimistic results. While top management is an important proponent of ESG initiatives, external factors such as regulatory requirements and consumer expectations play an even greater role. As a result, ESG data is predominantly used in product development and marketing, while HR departments are the least affected by ESG strategies.

Challenges and future directions

This year's survey shows that Swiss companies are making remarkable progress in their ESG efforts. However, they still face significant obstacles. "There is widespread awareness among top executives about the strategic value of ESG data. However, using this information effectively to drive business success remains an area that requires further cultivation," the study authors concluded. 

Source: www.zhaw.ch